Towards Water 2020

Simon Markall, Head of Public Affairs for Ofwat, on meeting the challenges for water and wastewater services in England and Wales.

We have already set out the shared vision for the sector as one where customers and wider society have trust and confidence in vital public water and wastewater services.

Population growth and climate change mean that the water sector in England and Wales faces growing pressure to address challenges such as water scarcity and environmental quality while improving the resilience of systems and services to customers. This all takes place in a world of rising customer expectations and new opportunities to innovate to deliver services.

Economic regulation has a role to play in enabling the sector to meet these challenges. Economic regulation can help to create value by encouraging and incentivising innovation, and discovery of new ways of delivering to customers. Economic regulation also allocates this value to customers, for example, through lower bills and better service, and by enabling a better environment or allowing investors to share value they have helped to create. And we think that our regulation of the sector needs to address the following key questions:

* How do we regulate to encourage service providers to focus on their customers over the longer term, rather than focusing their effort around periodic price reviews?

* How do we build on the customer-focused approach to the 2014 price review (PR14) and promote and maintain genuine customer engagement that drives companies’ businesses?

* How do we regulate to encourage service providers to discover new ways of delivering outcomes to customers, which reduce cost and improve service?

* How do we encourage service providers to discover and reveal the efficient cost of providing services?

* How can we best align the interests of investors, management and customers?

* How can we maintain investor and customer confidence through the transition to any new arrangements?

We are promoting discussion on the future regulatory framework. A number of stakeholders have already submitted papers setting out their approach to the evolution of sector regulation.

Together with its supporting policy discussion papers, ‘Towards Water 2020 – meeting the challenges for water and wastewater services in England and Wales’ sets out the challenges facing the water sector in England and Wales, and how we can help it to address these challenges.

We are seeking the views of all interested parties to promote a shared understanding of the challenges facing the sector and all those with an interest in it. We welcome your responses to this discussion document by 5.00 pm on 10 September 2015.